Elections and the Stock Market – no politics, just fun….
As promised, it’s time for some data and fun historical facts on the stock market before and after a Presidential election. This is a politics-free zone, so read on!
Let’s look first at what has historically happened to the stock market during Presidential election years and then what happens after the election, depending on which party wins. Spoiler alert….. it doesn’t really matter.
Now here is a shocker, election years tend to be volatile but in general, the market goes up. Remember though that there have only been 18 Presidential election years since 1952 so there is limited data. And let’s remember that in general over time, markets go up or none of us would be doing this. The S&P 500 has averaged a 7% gain in the election years since 1952 which is short of the 10% average gain in all years, but there has not been a down election year during this time. However, “re-election” years, which this clearly is, have delivered a better 12.2% gain since 1952. We all know that past market performance is no guarantee, but I like our odds given the performance already this year.
Now for some interesting election year data:
Top sectors in presidential election years since 1952: energy and financial services
Bottom sectors in presidential election years since 1952: materials and technology (hm?)
Now what happens after the election? In general, markets go up, regardless of which party wins the White House. And although I love the Schwab chart below which shows the market performance depending on the party of the President and Congress, my conclusion is that there is really no conclusion – in other words, there are other far more important factors which influence what the market does. But might be good Independence Day, Labor Day, and Thanksgiving party conversations anyway!
